Long Straddle Example: Cost, Risk and Break-Even Points
Straddles and StranglesA long straddle pairs an at-the-money call with an at-the-money put at the same expiration. In this segment, OIC instructor Ken Keating explains how the position is built and what delta neutral means.
0:00 Introduction: Jedex Airline Example
0:29 Stock Price $100, IV 35%, 21 DTE
0:47 Buying 100 Call + 100 Put
1:20 P&L Chart: V-Shaped Payoff
1:37 Maximum Risk: $680
2:24 Break-Even Calculation: $106.80 / $93.20
3:37 Worst Case: Stock at $100
4:14 Profit Requires Outside Break-Evens
Register to view the complete Beyond Directional Thinking: Understanding Straddles and Strangles webinar: https://bit.ly/3S57jdZ.
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